Purchase orders (POs) are an important part of any business' operations: they provide the basis for contracts that are necessary to produce, deliver and pay for products, services and materials. As such, it is essential to ensure that PO accuracy is maintained throughout the life of the order.
The Consequences of Inaccurate Purchase Orders
Inaccurate POs can have serious consequences for a business. As they form the basis of contracts, incorrect information can lead to costly delays and disputes. These can be especially damaging if they involve customers or suppliers, as trust in the business may be lost. Poor PO accuracy can also lead to a range of other issues, such as incorrect pricing or delivery times, or incorrect product specifications.
A report by Gartner found that inaccurate purchase orders can lead to an average cost of $50 per order due to delays, errors, and additional administrative expenses.
Inaccurate POs can result in confusion and miscommunication among staff, as well as a range of other issues. For example, employees may be confused about which products or services are being ordered and from whom, leading to unnecessary delays or discrepancies in the order. Poor accuracy can also affect the overall security of the business, as incorrect information can make it easier for fraud to occur.
The Benefits of Accurate POs
On the other hand, accurate POs can provide numerous benefits for businesses. For example, they allow staff to clearly understand the details of an order, leading to less confusion and fewer mistakes. Accurate POs also ensure that suppliers or customers are provided with the correct information, helping to build trust and encouraging repeat business. This in turn can lead to improved customer service levels and overall profitability.
In addition, accurate POs make it easier to track orders, allowing businesses to quickly identify any discrepancies and take corrective action if necessary. This can help to reduce delivery times and improve overall product quality. Finally, accurate POs also allow businesses to better manage their finances, as they provide a clear record of each transaction.
Best Practices for Creating Accurate Purchase Orders
There are a number of best practices that businesses can use to ensure that their purchase orders are accurate. For example, each PO should include all relevant information such as product details and pricing, delivery times, payment terms and contact information. This will help to ensure that all parties involved in the transaction have access to the correct information.
It is also important to ensure that purchase order information is reviewed before it is sent out. This will help to catch any mistakes or discrepancies before they become an issue. Finally, businesses should keep accurate records of all purchase orders, as this will make it easier to track orders and identify any discrepancies.
Dell Technologies, a multinational technology company, implemented a comprehensive purchase order management process that helped to increase the accuracy of its purchase orders and reduce errors.
The Role of Automation in Keeping POs Accurate
Automation is increasingly being used to ensure that purchase orders are accurate and up to date. Automated systems can help streamline the process of creating and sending out purchase orders, ensuring that all relevant information is included in each order. Automation also helps to reduce manual errors, as data entry mistakes are eliminated and information is automatically updated as needed.
Automation can also help businesses save time and money by reducing the need for manual data entry and eliminating the need for manual tracking of purchase orders. Automated systems can also help to ensure that all purchase orders are accurate and up to date, reducing the risk of errors and ensuring that customers receive their orders on time. Automation can also help to improve the accuracy of financial reporting, as all purchase order information is automatically updated and tracked.
On FactWise Source-to-Pay, an end-to-end comprehensive procurement platform for global product manufacturers, purchase order creation is simplified and can be automated to ensure accuracy and efficiency. With our holistic supplier analytics and RfX management analytics, teams can negotiate lower costs and payment terms to maximize their cash flow. PO creation is automated on FactWise, and all item information including item description and specifications, quantities, payment terms, delivery timelines, incoterms, and other user-added custom fields are auto-added from the RfX event to all Purchase Orders created ensuring a high degree of data integrity and tremendous accuracy. FactWise POs also include all company information for buyers and sellers, and can be downloaded from the system with a single click. FactWise increases savings by up to 25% and efficiency by up to 20%.